Government joins false claims suit against Gallup

By PETE YOST | August 22, 2012 | 6:45 PM EDT

WASHINGTON (AP) — The Justice Department said Wednesday that it has joined a lawsuit against The Gallup Organization alleging the polling company filed false claims on contracts with the U.S. Mint, the State Department and other government agencies.

A fired Gallup employee who became a whistle-blower, Michael Lindley, alleges in the lawsuit that he discovered shortly after going to work for the polling company that it had engaged in widespread fraud against the government.

Honored as "Rookie of the Year" at Gallup in 2009, Lindley says he was fired six months later when he told colleagues that if the company didn't report overbilling practices to the government, Lindley would do so himself.

His lawsuit, filed nearly three years ago and unsealed Wednesday in federal court, says Gallup routinely submitted inflated cost estimates which enabled the company to reap huge profits from its government business.

In addition to its polling work, Gallup provides consulting services to government, corporate and other clients around the world.

The Justice Department said it was stepping into the case with respect to Gallup's contracts with the Mint and the State Department.

In response, Gallup general counsel Steve O'Brien said, "We believe that the allegations and the legal theory that the Justice Department is using are entirely meritless."

O'Brien said the work involved fixed-price contracts that were all competitively bid and paid for as agreed. Now, said O'Brien, the government is saying "the price should have been something else."

O'Brien is among those named in Lindley's lawsuit. According to Lindley, when he asked O'Brien why he had been fired, O'Brien said "When you start talking about going to the Department of Justice, I don't trust you anymore."

On Wednesday, O'Brien called Lindley's assertion "a total and complete fabrication."

According to Lindley's lawsuit, on a $2 million-a-year sole-source contract with the Mint, Gallup inflated the number of hours required to complete the work, usually by a multiple of two or three times the number justified by historical experience. Gallup was hired to conduct market research for the sale of newly issued coins.

The State Department work involved the U.S. Passport Agency. During negotiations on a $25 million sole-source contract, Gallup allegedly submitted detailed budgets with vastly inflated hours on the time to complete the work for the agency. Gallup was hired to conduct surveys to predict the level of passport applications stemming from changes in border laws governing travel to Mexico and Canada.

Separately, Lindley alleges that Gallup exercised undue influence over the award process on a $15 million contract with the Army's Joint Contracting Command in Iraq.

The lawsuit says Gallup actually wrote the request for proposal that the Army's contracting officer issued. Gallup wrote the proposal so the contract could be awarded only to a company with characteristics that were unique to Gallup, according to Lindley's allegations.

In a $10 million contract with a Health and Human Services Department agency, Gallup allegedly shifted costs from some of its fixed-price government contracts to a cost-plus contract with the Substance Abuse and Mental Health Services Administration.

In a $2 million-a-year contract with the National Highway Traffic Safety Administration, a Gallup executive allegedly submitted inflated estimates of the hours required to complete various tasks, inflating the contract price.